Mizuho, the nation's second-biggest bank by assets, said on Friday it will pay out 6.5 yen a share, up from the originally planned 6 yen. The first increase in six years means the bank will return an additional 12 billion yen ($120 million) to shareholders for the business year to March.

Japan's three "megabanks" are benefiting from Prime Minister Shinzo Abe's stimulus policies. A surging stock market has boosted their trading businesses and the value of their equity holdings, while economic recovery is beginning to spur lending demand and corporate capital spending.

Getty Images

Shubiya district, Tokyo, Japan

But while the lenders have enough capital under new guidelines set by global regulators, megabank executives worry that rising global pressure for even tighter capital requirements may keep them from raising dividends and buying back shares over the next four years as much as investors now hope.

Mizuho and Sumitomo Mitsui Financial Group saw their October-December net income slip from the year-earlier boom at the start of "Abenomics," in earnings announcements last week. The same is expected for Mitsubishi UFJ Financial Group , Japan's biggest lender by assets, which reports its results on Monday.

But the three remain on track to post their biggest combined net profits in eight years for the 12 months through March.

Investors think it's payback time, as the megabanks have been relatively stingy with their capital in recent years.

"We have been discussing this issue with a lot of investors almost every single day," MUFG deputy president Masaaki Tanaka told Reuters this week. "We know we have very strong pressure from the investors to give back some money to them."

The bank will decide just before its June annual shareholders' meeting what to do about a "buyback or whatever kind of capital action," Tanaka said.

Japan: 'Things are definitely on track'

Seijiro Takeshita, director at Mizuho International, says Abenomics is "definitely on track" after Japanese inflation rose at the fastest pace in five years.

But while the banks may boost dividends and buybacks this year, they may have to increase their capital buffers over the following three years to please global regulators.

"Honestly, we are in a tight spot," a top megabank official said recently with a grimace.

"We'll have to give some kind of broad guidance (on shareholder returns) in our earnings statements" for the financial year, even though final capital requirements will not be known in time for the May announcements.

As part of the Basel III global banking agreement crafted in the wake of the global financial crisis, regulators decided on Jan. 12 that major internationally active banks will need to hold capital worth 3 percent of total assets from January 2018.

The bank had Tier 1 capital worth 4.95 percent of total assets at the end of September, compared with Mizuho at 3.78 percent and SMFG at 4.98 percent. Banks do not need to announce their Basel leverage ratios until next year.

Japan sales tax hike won't derail economy: Pro

Martin Schulz, Senior Economist at Fujitsu Research Institute, explains why he thinks April's sales tax hike will not result in a significant consumption slowdown.

Even including off-balance-sheet assets, the three banks still have Basel leverage ratios above 3 percent, reckons Nana Otsuki, a banking analyst at Merrill Lynch Japan Securities.

But this Basel ratio is only meant to be a minimum; the United States, Britain and others are pushing for stricter capital rules. Ratios as high as 4-6 percent have been mentioned, although the additional buffers could be defined less stringently that the first 3 percent.

And even if the global minimum remains the same, countries can set their own higher thresholds, so global investors might press all major banks to meet the same standards as, say, U.S. and UK lenders. This could mean the megabanks would have to retain more earnings, sell shares to raise capital or both.

"We want a buffer of 0.5-1 percentage point" above requirements, said a senior executive at one of the top banks.

A 1-point increase in the leverage ratio would mean each megabank would need to set aside 1.5-2.5 trillion yen ($15-24 billion) more capital.

For now, the potential capital rules will not be a big impediment to banks' shareholder returns, said banking analyst Toyoki Sameshima at BNP Paribas Securities. The banks this year will likely increase dividends or buy back shares, and they have various ways of raising capital and shedding assets, he said.

MUFG historically has preferred to pay out dividends, Tanaka said, but he did not rule out the possibility of a share buyback as well.

An SMFG spokesman said that in considering dividend payments, "we need to make proper shareholder returns in consideration of our capital level, dividend ratio and other things against the background of Basel III."

The megabanks have some room to share the wealth with investors.

Their dividends and buybacks amount to 20-25 percent of net income, one analyst said. They have the capacity to raise their redemption ratios to 30 percent, the average for Japan's regional banks, and they might do so, said the analyst who asked not to be identified due to company policy.

But experience has taught the megabanks to be careful. They showered money on shareholders, including 150 billion yen each by MUFG and Mizuho, in 2007 - only to have the financial crisis hit, forcing them to tighten up again.

"They need to be cautious about capital outflows until the direction of the leverage ratio debate becomes clear," said a senior official at Japan's Financial Services Agency.